Berkshire Hathaway Profits Fall
Warren Buffett's Berkshire Hathaway reported a drop in quarterly profits, a potential red flag for the broader economy. The conglomerate's results were dragged down by weakness in its core insurance operations and a significant writedown on its holdings in Occidental Petroleum, reflecting volatility in the energy sector.
The conglomerate's operating profit saw a significant downturn, falling roughly 30% to $10.2 billion in the fourth quarter, down from $14.53 billion in the same period a year prior. For the full year, operating earnings declined 6% to $44.49 billion. A deep dive into the insurance division reveals a 54% plunge in underwriting profits during the fourth quarter, which fell to $1.56 billion. Investment income from the insurance arm also slid by nearly 25%, hampered by falling interest rates and increased price competition in the reinsurance market. The company booked a $4.5 billion writedown in the quarter on its investments in Occidental Petroleum and Kraft Heinz. Berkshire indicated the belief that the decline in Occidental's stock price was not "temporary," though it does not intend to sell its stake. This earnings report marks the final quarter with Warren Buffett as CEO. His successor, Greg Abel, took the helm at the start of 2026 and released his first annual letter to shareholders, vowing to maintain the company's long-standing financial discipline. Despite the profit drop, Berkshire Hathaway's cash reserves remain formidable at $373.3 billion. This massive cash pile provides new CEO Greg Abel with substantial capital for potential large-scale acquisitions. The company continued its trend of selling more stocks than it bought for the 13th consecutive quarter. It also abstained from buying back its own shares for the sixth straight quarter, a cautious stance noted by investors.
